# What is Dollar Cost Averaging?

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Learning strategies is important for any and all of us. Nobody wants to buy blind and nobody should be putting all their eggs in the basket at once!

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Say you have a chart for IOTX you want to buy some. Thats great but you need to remember one thing if you have let's say 1BTC for ease sake to jump into the trade with you should not be putting it all in on one price target.

Here using an example of my chart of IOTX you can see that I have drawn lines of support (green). These are generally where the price will bounce from and move back up, we find these levels to know where to place our buy orders.

SO as you see in the example the chart shows IOTX currently at 302satoshis.

Wanting to enter IOTX I would use the green support levels and entry points, so 288, 261, 231, 183 satoshis respectfully.

Dollar cost averaging, scaling in, laddering in many different people use different terms but basically, this is a good strategy especially for a long term trade that may swing down.

To keep things simple you set a percentage amount for each by. To keep things simple you can use 25% at each entry.

In our example we have 1BTC,

Entry 1: 288sats = 0.25BTC

Entry 2: 261sats = 0.25BTC

Entry 3: 231sats = 0.25BTC

Entry 4: 183sats = 0.25BTC

You can change these numbers accordingly of course, but this way is much more effective in the crypto market and if you miss Entry 4 that is also okay you will have 0.75BTC in play.

The reason you do this is simple you risk much less this way. Imagine you bought 1BTC at 288sats and it went down to 183sats you will have lost 36% or 0.36BTC. Dollar cost averaging in you lose far less, not to mention if your trade hit all 4 entry points and only got back to 288sats you will have made 36% on entry 4, 24% on entry 3, 10% on entry 2 and broke even on the first entry. Total profit = 0.09+0.06+0.0275+0

Total profit would be 17.75% on this trade and that's only if it got back to the original entry point. Your loss also is decreased greatly using this strategy.

In another scenario that is likely,  we would get to the first resistance at 338sats. To break that down you would have earned:

0.2125+0.1125+0.07+0.0516= 0.4466 or about 45% gain on 1BTC - Not bad for a days work right!

The point is your risk/reward is much better doing it this way and long term you will likely lose far less meaning you can gain far more.

You may also things differently so as well for example:

Entry 1: 288sats = 0.4BTC

Entry 2: 261sats = 0.25BTC

Entry 3: 231sats = 0.25BTC

Entry 4: 183sats = 0.10BTC

This is up to your own judgment and risk assessment.

Anyways I hope this will help some out there understand what Dollar Cost Averaging is and it will help them understand it better.

For more visual learners do check the video above and do not forget to Subscribe, smash the like and share to friends.

Kind Regards,

Coach K

https://steemit.com/@kovshoff
https://www.reddit.com/user/Crypto_edu

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Joel Kovshoff

Educator, Start-up Accelerator, Trading services, Speaker, MC and Entrepreneur